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Everything you need to know about health & life insurance: Part 1

In the first of two parts, John Lowe the Money Doctor reveals in simple language all you need to know about life and health protection.

Many people seem to distrust both life insurance and the people who sell it. Why should this be? I’m sure it is partly because no one likes to think about anything bad happening to them, and partly because – in order to draw attention to a very real need – life insurance salespeople are forced to bring up uncomfortable subjects with their prospective clients.

However, although it is not something you may rush to tackle, making certain that you have adequate life – and health – insurance will bring you genuine peace of mind.

First-class medical protection, critical or serious illness cover and life insurance are available at a remarkably low price providing you know how to buy it but you must:

  •  Make sure you are not sold protection you don’t need
  •  Decide what cover is sensible for you to take out
  •  Find out who you can trust to advise you
  •  Make sure you get your cover at the lowest possible price

You know you should…
It isn’t pleasant to dwell on being ill, having an accident or – worst of all – dying. Nevertheless, you owe it to yourself – and those you care for – to spend a little time making sure you are protected should the worst happen. This means being:

  • protected by income protection, also called PHI (permanent health insurance) if you are too unwell to earn an income
  • protected by private medical insurance if you need medical attention
  • protected by life cover if you, or your partner, should die.

There are, of course, plenty of facts and figures available proving just how likely it is for someone of any age to fall ill or die. Sadly, such statistics are borne out by everyone’s personal experience. The truth is we all know of instances where families have had to face poor medical care and/or financial hardship as the result of a tragedy. We all know, too, that spending the small sum required to purchase appropriate cover makes sound sense.

Spend time, not money
The secret is to identify exactly what cover you really need and not to get sold an inappropriate or overpriced policy. It is also important to review your needs on a regular basis. What you require today, and what you’ll require in even two or three years’ time could alter dramatically.

The best way to start is by considering what risks you face and deciding what action you should take. Here are three questions that everyone should ask themselves, regardless of their age, gender, health or financial circumstances.

Question 1: What would your financial position be if you were unable to work – due to an accident or illness – for more than a short period of time?

Obviously, your employer and the state will both be obliged to help you out. However, if you have a mortgage, other debts and/or a family to support your legal entitlements are unlikely to meet anything like your normal monthly outgoings. If you do have a family then your spouse will have to balance work, caring for you and – possibly – caring for children. Is this feasible or – more to the point – desirable? How long will your savings last you under these circumstances? Do you have other assets you could sell?

Unless you have substantial savings and/or low outgoings then income protection cover and/or critical/serious illness insurance could both make sound sense.

Question 2: Do you have anyone dependent on you for either financial support or care? Are you dependent on someone else financially? Do you have children – or other family members – who would have to be cared for if you were to die?

If you are single and don’t have any dependents then the reason to take out life insurance is in order to settle any debts and/or leave a bequest. If, on the other hand, there is someone depending on you – either for money or for care – then life cover has to be a priority.
If you are supporting anyone (or if your financial contribution is necessary to the running of your household) then you need to take out cover so that you don’t leave those you love facing a financial crisis.
If you are caring for anyone – children, perhaps, or an ageing relative – then you should take out cover so that there is plenty of money for someone else to take over this role.

Question 3: Does it matter to you how quickly you receive non-urgent medical treatment? If you need medical care would you rather choose who looks after you, where you are treated and in what circumstances? How important is a private room in hospital to you?

We are fortunate enough to enjoy free basic health care in Ireland. However, if you are self-employed or if you have responsibilities which mean that it is important for you to be able to choose the time and place of any medical treatment, then you should consider private medical insurance.

Next week in Part 2, I shall give the Lowe down on all the different types of cover available … stick with me.

By John Lowe

Managing director of Providence Finance Services Ltd trading as The Money Doctor.

Reference: www.rte.ie

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Less than half of all employees have a private pension – CSO

Less than 20% of young people were contributing to a pension, compared to more than 70% of those aged 45-54

Less than half of all employees in Ireland were saving towards a pension last year, according to the Central Statistics Office.

Its survey of pension coverage in the third quarter of 2018 found that 47.1% of all people in employment were contributing towards a private pension.

That is up 0.4 percentage points on the same period of 2015.

When pension coverage from previous employments, as well as deferred pensions and pensions in draw-down mode, are included the ratio of those covered rose to 56.3%.

The CSO found that just 16.3% of people aged 20-24 were contributing to a pension, compared to almost 71% of workers aged 45-54.

Meanwhile the data shows that more than half of all self-employed people had pension coverage.

The Irish Congress of Trade Unions said the figures highlighted the need for pension auto-enrolment as part of a wider reform of the system in Ireland.

“Tax relief has failed as a policy instrument for encouraging low and middle-income earners to save enough towards a financially secure retirement, and there is no legal obligation on an employer to provide or contribute to a pension scheme for employees,” said ICTU’s social policy officer Dr Laura Bambrick.

“As the State pension is paid at a flat-rate, rather than earnings-related, workers without retirement savings are exposed to a significant drop in their living standards in old age.”

Reference: www.rte.ie